INDIANAPOLIS (AP) -
Indiana Gov. Mike Pence is keeping quiet about negotiations underway to cut
the business equipment tax, a proposal that a new report shows might only
bring slight economic growth to the state.

Pence was
tight-lipped Thursday during a conference with reporters at his Statehouse
office, refusing to give details on exactly how the tax cut proposals should
be changed to shield local governments from an estimated $1 billion a year
loss in revenue.

“I don’t want to
negotiate this in public,” Pence said. “We have a legislative process.”

Two separate
proposals to cut the business equipment tax have been approved by the House
and Senate. The House plan would give counties the option of eliminating the
equipment tax, while the Senate proposal would eliminate it for small
businesses.

The governor’s
guarded remarks came the same day that the nonpartisan Indiana Fiscal Policy
Institute released a report detailing problems with the proposed tax cut.

“There is scant
empirical evidence that directly relates economic growth to the elimination
of the tax on inventory in Indiana,” the report reads.

The equipment tax
also has little effect on whether businesses relocate to other states,
according to the report. The claim counters arguments by Pence that the
measure would make Indiana competitive with surrounding states that cut or
lowered similar taxes.

Illinois and Ohio
ended business equipment taxes, and Michigan is working to phase out similar
taxes.

Eliminating the tax
on business equipment in Indiana likely would have the most impact on a
county to county level, IFPI President John Ketzenberger said. Given the
option under the House bill, counties that nix the tax would have an
advantage in attracting business.

“If you’re talking
about lifting the entire state economy,” Ketzenberger said, “it doesn’t make
sense for counties to be poaching jobs or investment from one county to
another.”

Mayors and
Democrats have blasted efforts to cut the equipment tax at the expense of
local governments and taxpayers. Pence later said he would support at
“phase-out” of the tax and some state aid to help soften the impact.

Pence’s vow to
prevent an “unduly burden” on businesses is further complicated by tax caps
enshrined in the state’s constitution, Ketzenberger said. Cities and
counties still are coping with lost tax dollars after an amendment to the
state constitution topped out local property taxes 1 percent, and raising
taxes to compensate for the equipment tax would only place more homeowners
at the cap.

How Pence and
lawmakers plan to deal with that is unclear.

“We’re looking at a
broad range of options to give communities the ability to meet their needs
to not face hardship because of this reform,” Pence said. “I’m confident
we’re going to put together a menu of options to do that.”